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Micron Technology Shares of Samsung Electronics Co. rose nearly 14% in after-hours trading after the memory maker forecast higher-than-expected first-quarter revenue on demand for memory chips used in artificial intelligence computing.
Micron is one of only three suppliers of high-bandwidth memory (HBM) chips, along with South Korea's SK Hynix and Samsung, allowing the US company to tap into demand for semiconductors that help power generative AI technology.
HBM is a type of space-saving and power-efficient dynamic random-access memory (DRAM) chip that is essential for AI-focused GPUs that help process massive amounts of data.
“Demand from data center customers remains strong and customer inventory levels are healthy,” Micron CEO Sanjay Mehrotra said on a conference call with analysts.
The company said in June that the HBM chips it uses in AI processors designed by Wall Street darling Nvidia were sold out for 2024 and 2025 with prices already set.
Micron expects record revenue of about $8.7 billion, plus or minus $200 million, in the first quarter, and expects gross margin to rise to about 39.5% for the same period.
Analysts were expecting revenue of $8.28 billion in the first quarter and an adjusted gross profit margin of 37.7%, according to LSEG data.
The AI boom has also helped Micron cushion the blow from a memory chip glut in the PC and smartphone markets.
AI-enabled PCs are expected to have more memory chips, which will help companies like Micron.
AI-powered PCs could have 30% more DRAM, and Microsoft's push to encourage users to switch to Windows 11 from an older version could expand the market, especially for business PCs in 2025, said Kenjay Chan, senior analyst at Summit Insights.
Micron's results typically set the tone for the chip industry as it reports ahead of its peers and serves a broad customer base that includes the PC, data center and smartphone industries.
“HBM, high-capacity memory, and data center flash storage, each of these three product categories will generate billions of dollars in revenue in 2025,” said Sumit Sadana, chief business officer at Micron.
For the first quarter, the company expected adjusted earnings of $1.74 per share, plus or minus 8 cents, compared with analysts' estimates of $1.65.
